Fidelity International has launched the Fidelity Global Equity Enhanced Yield UCITS ETF and the Fidelity US Equity Enhanced Yield UCITS ETF. According to the firm, these vehicles form part of its new Equity Enhanced Yield ETF range. The objective is to provide investors with a differentiated source of income while maintaining exposure to equity markets.
The firm explains that these new ETFs combine an actively managed equity portfolio with an overlaid systematic option strategy, blending Fidelity’s fundamental research capabilities with a rules-based approach to generate additional income. ESG factors are also taken into account when evaluating investment risks and opportunities. To execute the project, each ETF will feature $5 million in seed capital provided by Susquehanna, an authorized market participant.
“Against a backdrop where market volatility continues to pose challenges for investors, we are observing growing demand for strategies capable of providing alternative sources of income while allowing them to remain invested in equity markets,” noted Neil Davies, Head of ETFs at Fidelity International.
He added: “What sets this range apart is that it offers investors access to Fidelity’s bottom-up equity research in a systematic format. At the same time, a disciplined, rules-based option strategy seeks to deliver an additional source of income, while option premiums also help buffer part of the impact from market downturns.”
For his part, Vincent Li, Head of Derivatives at Fidelity International, commented: “Options can be a powerful tool to reshape the return profile of an equity investment. Our approach is intentionally systematic, utilizing a disciplined framework to select and execute index call options with the goal of generating additional income on a consistent basis, while maintaining meaningful participation in equity markets.”
According to the company, this launch further expands Fidelity International’s active ETF offering, bringing its product suite to 28 funds. Fidelity is one of Europe’s largest active ETF providers, with $16.8 billion in active ETF assets under management.
